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PUBLIC HEARING ON THE ENGINEER’S REPORT, FY 2018-19 ANNUAL BUDGETS AND ASSESSMENTS FOR INDUSTRIAL STORM DRAINAGE BASIN MAINTENANCE DISTRICTS
recommended action
RECOMMENDATION
It is recommended that the City Council conduct the public hearing called for at its May 15th meeting to consider public comment and testimony regarding the approval and adoption of the annual budgets and assessment rolls for the five districts listed below (each, a “District”).
At the conclusion of the public hearing, if less than fifty percent of the owners of the assessable lands within a district file a protest of the proposed levy of annual maintenance assessments, it is recommended that the City Council adopt resolutions to:
1. Overrule any and all public hearing protests or objections (including all written protests not withdrawn in writing before the conclusion of the public hearing) to the proposed levy of assessments in each District, provided, as to each District, no majority protest exists.
2. Approve and adopt the preliminary FY 2018-19 annual budget for each District.
3. Confirm and levy FY 2018-19 assessments for each of the following five industrial storm drainage basin maintenance assessment districts.
• Western Pacific Industrial Park Storm Drainage Basin Maintenance District, Project Number 81-1 (Western Pacific)
• Charter Way Industrial Site Storm Drainage Basin Maintenance District, Project Number
86-4 (Charter Way)
• Arch Road Industrial Park Storm Drainage Basin Maintenance District, Project Number
84-2 (Arch Road)
• Airport Gateway Center Storm Drainage Basin Maintenance District (Airport Gateway)
• Stockton Airport Business Center Storm Drainage Basin Maintenance District, Project Number 84-1 (Stockton Airport)
4. Approve and adopt the Report showing the 2018-19 assessments and the adjusted drainage acres to be used in assessing the costs and expenses in connection therewith as the method of assessment to be used to pay the costs and expenses of the maintenance and operation.
5. Approve, confirm and levy the assessments as set forth in the Report of the annual amount of costs and expenses of the maintenance and operation of the improvements, upon the several subdivisions of land in each District in proportion to the estimated benefits to be received by said subdivisions, respectively, from the operation of said improvements and of the expenses incidental thereto, as set forth in each respective Report.
It is also recommended that the City Manager or his designee is authorized and directed to execute all documents, including, but not limited to, agreements and amendments.
It is further recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of these resolutions.
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Summary
The Municipal Improvement Act of 1913 and Stockton Improvement Procedure Code, Part V, under which these five districts were formed, requires annual Council approval of the Engineer’s Report, Budget, Assessment Rolls and approval to levy the corresponding annual assessments for each separate district. The assessment district rates for FY 2018-19 will remain at the same level as the FY 2017-18 rates. The City makes no financial contributions to any of the districts. All fees, costs, and expenses incurred will be payable solely from the proceeds of the annual assessments to be levied and collected on the San Joaquin County property tax roll, or from each district’s reserve funds.
If approved, the City Council’s action will adopt the annual budgets and assessments for the five industrial storm drainage basin maintenance districts listed above for FY 2018-19.
DISCUSSION
Background
The City Council, pursuant to Resolution Numbers 85-0416, 86-1059, 88-0492, 88-0552, and 99-0400, authorized the formation of the five industrial storm drainage basin maintenance districts (Attachment A). The formation of these districts was based on the provisions of the Municipal Improvement Act of 1913 (Act) and the Stockton Improvement Procedure Code (Stockton Code). The Act and the Stockton Code contain provisions for the City to form assessment districts for the maintenance and operation of improvements that impart a special benefit to an area.
The purpose of these Districts is to provide funding for the operations and maintenance of the storm drainage basins and the associated improvements. The maintenance includes vector control; weed abatement, rodent control, slope dressing; mowing, disking; grading the basin bottom as needed, trash and debris pick-up and removal; cleaning of the basin structures; and sedimentation relocation. Property owners within a district are responsible for funding only those improvements within the district from which they receive benefit.
Western Pacific, Charter Way, and Arch Road districts were established prior to the passage of Proposition 218. No annual cost of living adjustments were included in the formula for calculating the annual assessments for these districts. The assessments for the property parcels are at the maximum allowable assessment rates and have been since the formation of these districts. Any changes to the assessment/formula for the calculation of the annual assessments would need to be approved by, ballot by, the property owners that will be affected by the assessments.
A portion of the Stockton Airport Business Center are at the maximum allowable assessment rate with no allowable cost of living adjustments. In FY 2004-05, thirty-five (35) parcels were annexed into the Stockton Airport Business Center District, following the Proposition 218 prescribed property owner ballot procedure. The Engineer's Report for the annexation of the newer parcels allowed for cost of living adjustments to be factored into the calculations of the annual assessments for those parcels. Staff factored in the allowed cost of living adjustment on those parcels for the calculation of the maximum allowable assessment for the district.
On May 15, 2018, the City Council preliminarily approved and confirmed the budgets and proposed assessments for each of the districts and set a public hearing for June 5, 2018. Through this process and once confirmed and levied by the Council, annual assessments are included on the San Joaquin County property tax roll for collection.
Present Situation
Attachment B provides a summary of the proposed FY 2018-19 budget and assessments for each district. None of the FY 2018-19 assessments exceed the established Maximum Annual Allowable Assessments contained in the original Engineer’s Reports that were approved by landowner ballots or written consent of the landowners and approved by the Council as part of the district formation proceedings. The proposed budgets for the districts include engineering fees, attorney’s fees, estimated pond (basin) maintenance work, City of Stockton administration costs and a contingency.
The proposed FY 2018-19 annual assessments for the Western Pacific Industrial Park, Charter Way Industrial Site, and Arch Road Industrial Park districts are proposed to remain at the same level as the FY 2017-18 annual assessments.
Operational costs of the three basin districts referenced as Western Pacific Industrial Park, Charter Way Industrial Site and Arch Road Industrial Park are projected to exceed their maximum allowable assessments in FY 2018-19 by $5,105, $8,345, and $4,912, respectively, based on the contracted costs for preparation of the Annual Engineer’s Report and maintenance of the districts. Sufficient fund balance exists in reserve to cover the gap in costs not covered by the new assessment; therefore, staff recommends approving the full operating budget and the transfer of funds needed from reserve balance. The FY 2017-18 assessments, FY 2018-19 Proposed Assessments, Fund balance transfers, Operational budgets, and final projected FY 2018-19 fund balances are as follows:
|
District |
FY 2017-18 Actual Assessment |
FY 2018-19 Proposed Assessment |
FY 2018-19 Proposed Amount to Transfer from Fund Balance to Expenditure Account |
FY 2018-19 Operational Expenditure Budget |
FY 2018-19 Projected Fund Balance |
FY 2018-19 Maximum Allowable Assessment |
|
Western Pacific Industrial Park |
$17,320.00 |
$17,320.00 |
$5,105.00 |
$22,425.00 |
$79,311.97 |
$17,320.00 |
|
Charter Way Industrial Site |
$13,000.00 |
$13,000.00 |
$8,345.00 |
$21,345.00 |
$54,776.90 |
$13,000.00 |
|
Arch Road Industrial Park |
$17,373.00 |
$17,373.00 |
$4,912.00 |
$22,285.00 |
$115,593.43 |
$17,373.00 |
The Engineer’s Report for the Airport Gateway Center District and the portions of the Stockton Airport Business Center District that were annexed in FY 2004-05 contain provisions for an annual cost of living adjustment. Each year, the maximum annual assessments are increased in an amount equal to the greater of either 3.0 percent or the annual increase as shown in the Local Consumer Price Index (CPI) for the San Francisco-Oakland-San Jose All Items, All Urban Users as published by the Bureau of Labor Statistics for a similar period of time, which was 3.2 percent for December 2016. For FY 2018-19, the 3.2 percent adjustment has been applied to the calculation of the total maximum allowable assessment for Airport Gateway Center and only the annexed portions of the Stockton Airport Business Center Districts. Proposition 218 provides cities the latitude to approve the maximum allowable assessment, if warranted based on estimated expenditures or if estimated expenditures do not justify the maximum to collect a lesser amount.
Staff recommends that Council approve the maximum allowable assessment that will set the base for upcoming fiscal year calculations. The FY 2018-19 assessments will remain the same as the FY 2017-18 assessments. Staff recommends approving the full operating budget and the transfer of funds needed from reserve balance to cover the gap in expenses in the Stockton Airport Business Center. Sufficient fund balance exists in reserve to cover the gap in costs not covered by the new assessment. The FY 2017-18 assessments, FY 2018-19 Proposed Assessments, Fund balance transfers, Operational budgets, and final projected FY 2018-19 fund balances are as follows:
|
District |
FY 2017-18 Actual Assessment |
FY 2018-19 Proposed Assessment |
FY 2018-19 Proposed Amount to Transfer from Fund Balance to Expenditure Account |
FY 2018-19 Operational Expenditure Budget |
FY 2018-19 Projected Fund Balance |
FY 2018-19 Maximum Allowable Assessment |
|
Airport Gateway |
$28,258.00 |
$28,258.00 |
$0.00 |
$28,258.00 |
$313,524.55 |
$97,311.37 |
|
Stockton Airport Business Center |
$13,192.00 |
$13,192.00 |
$3,430.00 |
$23,834.00* |
$277,120.54 |
$39,631.24 |
*The FY 2018-19 operational expenditure budget is $23,834 including $7,212 transfer from other districts.
Administrative and operational costs for the maintenance of the Stockton Airport Business Center basin are offset with transfers from the Little Johns Creek Landscape Maintenance District No. 94-1 and Seabreeze Landscape Maintenance District No. 96-2 ($5,096 and $2,116 respectively), as the basin landscaping is provided for in those districts.
Fund balances are for infrastructure replacement accounts to fund construction of new facilities at the end of their operational life.
The tax rolls submitted for collection show the approved maximum assessment and the actual amount that will be submitted for collection on the San Joaquin County property taxes.
This public hearing allows any interested person an opportunity to make a protest for each district to the maximum annual assessment, to the proposed budget, or to the proposed method and proportion of assessment, either in writing or orally. A majority protest exists if more than fifty percent (50%) of the owners of the area of assessable lands within a district file a written or verbal protest. The required notice of this public hearing was published in The Record on May 24, 2018.
FINANCIAL SUMMARY
The proposed Industrial Storm Drainage Basin Maintenance Districts budget for FY 2018-19 is detailed in Attachment B. The fund balance projection is detailed in Attachment C.
The City makes no financial contributions to any of the districts. All fees, costs, and expenses incurred will be payable solely from the proceeds of the annual assessments to be levied and collected on the San Joaquin County property tax roll, or from each district’s reserve funds.
The use of the funds collected within the various districts is restricted by Proposition 218, to pay only the expenses related to the maintenance and operation of the specific storm drainage basin for which they are collected. The funds collected from the property owners of a district can only be used for the work on the basins in that district, as it imparts special benefit restricted to the properties of that district. District funds are segregated and cannot be used to operate, maintain, or support the activities of the stormwater, or any other, utility at large.
Administrative and operational costs for the maintenance of the Stockton Airport Business Center Basin are offset with transfers from the Little Johns Creek Landscape Maintenance District No. 94-1 and Seabreeze Landscape Maintenance District No. 96-2 ($5,096 and $2,116, respectively) as the basin landscaping is provided for in those districts.
There is no impact to the General Fund or any other unrestricted fund as a result of taking the recommended actions.
Attachment A - Storm Drainage Basin Districts Location Map
Attachment B - Storm Drainage Basin District Budgets
Attachment C - Fund Balance Projections